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Tax Highlights from the 30th AU Summit

Published on

02/09/2018

The 30th AU Summit this year was held on 28- 29 January 2018 in Addis Ababa Ethiopia. The theme of this year was: “Winning the Fight against Corruption: A Sustainable Path to Africa’s Transformation”. The agenda included the institutional reform of the AU, the Continental Free Trade Area, the composition of the Bureau of the Assembly of Heads of State and Government of the AU and the election of the new chairperson of the AU. HE. President Paul Kagame is the new chairperson for 2018-2019.

The sheer number of issues discussed was unprecedented. So, below are some highlights that link to work on taxation, financing and trade.

Financing the AU

- The 0.2% levy on eligible imports is being implemented. As per December 2017, Kenya, Rwanda, Ethiopia, Chad, Djibouti, Guinea, Sudan, Morocco, Congo Brazzaville, Gambia, Gabon, Cameroon, Sierra Leone and Cote d’Ivoire had started collecting the levy and depositing the funds within the AU accounts in their respective Central Banks. Ghana, Benin, Malawi, and Senegal have initiated legal and administrative processes to allow for the implementation of the 0.2% levy.

- The golden rules were recently approved by the finance ministers and the AU now has more credible budget processes in place.

- The membership of the Committee of Ministers of Finance should be expanded from 10 to 15 members based on the principles of equitable geographical distribution and rotation. In this regard, the Committee will be called the Committee of Fifteen Ministers of Finance. Current members are Chad, Congo, Ethiopia, Kenya, Algeria, Egypt, Cote d’Ivoire, Ghana, South Africa, Botswana, Cameroon, Nigeria and Morocco.

- Buhari proposed that the AU prioritize the following: 1. organize African youth congresses against corruption to sensitize the youth; 2. mobilize own AU member states to implement the AU convention on corruption; and 3. advocating for strengthening for criminal justice system across Africa by sharing information and sharing best practices in the enforcement of anti-corruption laws.

- AU must fight against the continuous assault on our economy and financial resources by MNCs in collusion with African citizenry. Some food for thought: The AU Malabo Protocol lists corruption as one of the international crimes and specifically provides for corporate criminal liability which would allow the African court to pursue criminal charges against corporations. If it is ever ratified and comes in force this could be a game-changer for holding MNCs liable for corrupt activities in Africa.

- One of the goals of 2018 AU theme should be on the developing a 'Common African Position on Asset Recovery'.

Continental Free-Trade Agreement (CFTA) update

- An Extraordinary Summit will be held on 21 March 2018 in Kigali for the signing ceremony i.e. for the Agreement on CFTA plus Protocol on Services. The Protocol on Goods may also be signed if finalized by that time. The CFTA will establish an internal market of 1.2 billion people.

- 5 members of AfroChampions club (comprising Dangote, Mufuruki etc) will join 10 officials from the public sector to lobby for the rapid ratification of the CFTA Agreement. The legal requirement is a minimum number of 15 signatories for the CFTA Agreement to come into force.

- The African Import-Export Bank (Afreximbank) will play a major role in the Intra-African trade initiative. The Bank's strategies are to create, connect and deliver on trade. The Initiative has 2 main areas: financing and trade facilitation.

Just few things on the AU reforms:

- The Reform Troika will be expanded to the Bureau of the Assembly and will collaborate with President Kagame in his capacity as Lead on the AU Institutional Reform process.

- SADC and Egypt requested that they be given flexibility to decide on the sources of funding instead of implementing the 0.2% levy. The rest backed implementation of the levy.

- Disagreement around the new institutional set up of the Commission, especially the proposal to disband the PSC and integrate its functions into an empowered PRC.